[January 13, 2014]SHANGHAI (Reuters) — China
will strengthen its supervision over initial public
offerings (IPOs), the securities regulator said late on
Sunday, two days after a small drug maker postponed its
share sale saying it was "too big".

The China Securities Regulatory Commission (CSRC),
which had promised a more hands-off approach to IPOs after
resuming them earlier this month following a 15-month hiatus,
said it will step up monitoring of the deals and their pricing.

The regulator said in a statement posted on its website it will
make random inspections on the procedures of book-building and
roadshows.

The statement comes after Jiangsu Aosaikang Pharmaceutical Co
Ltd said on Friday it had delayed its IPO after pricing it at
72.99 yuan ($12.06) per share, equivalent to 67 times its 2012
net profit.

The average PE ratio of pharmaceutical companies listed on
Shenzhen's Nasdaq-style ChiNext is 55.31, according to the
state-run Shanghai Securities Journal.

The CSRC denied it had forced Jiangsu Aosaikang Pharmaceutical
to halt its IPO, saying the decision was made by the company and
the underwriter, China International Capital Corp. But sources
familiar with the matter had earlier told Thomson Reuters
publication IFR that the regulator had pressured the drug maker
to postpone.

In the statement issued on Sunday, the CSRC said it would stop
the IPO and mete out punishment according to relevant rules if
an issuer and lead underwriters are found to have used
information other than what is disclosed publicly in the
prospectus.

The issuer and the underwriters will be required to publish
special statements in advance to caution investors against
potential risks if the proposed IPO price points to a
price-to-earnings ratio that is higher than the average PE ratio
of their listed peers, it said.

Consulting firm PwC has forecast the Chinese IPO market could be
worth up to 250 billion yuan ($41.3 billion) in 2014.